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IOL News
6 days ago
- Business
- IOL News
South African REIT sector experiences modest pullback in June
The share prices of South Africa's listed Real Estate Investments experienced a pull-back in June, but stronger property market fundamentals and the prospect of further interest rate cuts mean that good growth in distributable income is likely to continue this year. The South African REIT sector experienced a modest pullback in June, declining by 1%, trailing both equities (+2.4%) and bonds (+2.3%) for the month, following a really strong April. However, analysts caution against interpreting the decline as a reversal in fundamentals, pointing instead to profit-taking in larger counters, following an extended period of outperformance. In April, South Africa's REIT sector gained 6.9% and outperformed equities (4.3%) and bonds (0.8%), despite a disrupted trading month due to public holidays. 'The June dip appears more technical and structural. Many of the more liquid stocks have delivered stellar returns over the past 18 months, so some rotation was inevitable, particularly in a month where global sentiment was otherwise risk-on,' said Ian Anderson, head of listed property and portfolio manager at Merchant West Investments, and compiler of the SA REIT Association's monthly Chart Book. Hyprop, Resilient, and Redefine saw declines of just over 2%, and Growthpoint and Vukile edged slightly lower. Accelerate delivered a standout performance. The company gained 17.8% in June, following the announcement of a R100 million rights offer aimed at enhancing Fourways Mall and strengthening its working capital position.
IOL News
05-06-2025
- Business
- IOL News
South African REIT sector posts 4. 1% gain in May, outpacing equity and bond markets
The shares of South Africa's listed commercial property sector continues to rise steadily in May from a slow start at the beginning of the year as interest rates continue to decline, there was a small reprieve in global tariff regimes and local property fundamentals improved. Image: AI Lab The South African REIT sector continued its upward trajectory in May, posting a 4.1% gain, once again outperforming the equity market returns of 3.1% and the 2.7% rise in bonds, said Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments. Anderson, compiler of the SA REIT Association's monthly Chart Book, attributed the sector's improving sentiment to expectations of lower interest rates in South Africa, a small reprieve in global tariff tensions, and growing evidence that property fundamentals are strengthening. 'These trends set the stage for higher distributable earnings growth across the sector in 2025 and 2026,' said Anderson. The REIT sector gain in May builds on April's 6.9% surge, bringing the sector's year-to-date return to 6.7% - a recovery from a slow start in January. While the sector's performance still trailed the broader equity market's gain of 14%, SA REITs had now outpaced the bond market in 2025, signaling renewed investor confidence, he said. This comes as South Africa's 10-year government bond yield recently dropped to below 10% for the first time in more than three years. May saw several REITs reporting their financial results, reinforcing the sector's ongoing recovery: Redefine Properties results for the six months to end-February 2025 saw revenue up 3.5% and distributable income per share rising 0.7%, leading to an interim dividend increase. Full-year guidance was maintained, with expectations that distributable income per share will range between 50c and 53c - representing growth of between 0% and 6%. Equites Property Fund delivered full-year results in line with market expectations, increasing distributions by 2.1% to 133.92 cents per share. More notably, guidance for 2026 far exceeded consensus forecasts, with anticipated distribution growth between 5% and 7%, driven by strong rental growth and a high-quality logistics portfolio following two years of asset recycling. Equites was the top-performing REIT in May, with its share price rallying 10%. Western Cape focused Spear REIT also benefited from robust results, reporting a 9% share price increase following its full-year results to end-February 2025. The company also announced the acquisition of Berg River Business Park in Paarl for R182.15 million in an all-shares transaction. Management is exploring further acquisitions and developments. Other REITs reporting results in May included Burstone, Delta, Dipula, Emira, and Octodec, with a common theme emerging - property fundamentals in South Africa are improving across all sub-sectors, reinforcing investor confidence. The market capitalisation of the SA REIT sector now surpasses R250 billion - marking the first time since January 2020 that it has reached this level. 'With further interest cuts a possibility, stabilising macroeconomic conditions, and improving company guidance, investor confidence remains strong, and the momentum is likely to carry through the remainder of 2025,' said Anderson.
Zawya
29-04-2025
- Business
- Zawya
South Africa listed property stocks bounce back despite unsteady global markets
There's a silver lining for South African real estate investors, despite the turbulence in the global markets. According to Ian Anderson, head of Listed Property and portfolio manager at Merchant West Investments and the compiler of the SA REIT Association's monthly Chart Book, the local REIT sector is in significantly better shape today than it was five years ago. Anderson draws a stark contrast between the present and the sharp downturn the sector experienced during the Covid-19 pandemic. 'The current turmoil in global financial markets comes almost exactly five years after the last major drawdown for South Africa's listed property sector, when the South African economy was shuttered at the start of the pandemic. "Between March 2017 and March 2020, South African REITs, on average, lost more than 70% of their value - in the years since, the sector has clawed back nearly 68% in value (excluding dividends), though it remains more than 50% below March 2017 levels.' Understandably, with fresh waves of political and economic uncertainty spreading across global markets, investors are questioning whether history might repeat itself. Anderson is quick to offer reassurance. 'Large drawdowns from current levels are highly unlikely,' he said, citing several key reasons. Firstly, South African REITs are trading at significant discounts to net asset value—unlike the premium conditions seen at the end of 2017. "Secondly, the sector has spent the post-pandemic years strengthening its balance sheets through lower payout ratios, strategic asset recycling and timely equity capital raises. This has helped bring down loan-to-value ratios across most of the sector. Fundamentals show resilience Anderson said while economic growth may be sluggish or even turn negative, the context is vastly different from 2020. 'Economies remain open, tenants continue to trade and rents are being paid. That's a far cry from the conditions during April and May of 2020.' He does caution, however, that short-term volatility is likely to persist, particularly as global headlines are dominated by geopolitical tensions and trade disputes - especially between the United States and China. Beneath that noise, property fundamentals in South Africa continue to improve. 'Companies that reported results in March, including sector heavyweight Growthpoint Properties all reported improved trading conditions in their South African portfolios,' Anderson said. Growthpoint, for example, has revised its guidance upward - from a decline in distributable income per share (DIPS) to expected growth between 1% and 3% for the year ending June 2025. The company saw a 6.2% increase in South African net property income for the six months to December 2024, while the V&A Waterfront recorded a 16.6% surge in like-for-like net property income, driven by increased tourism. Other REITs are also showing positive momentum. Resilient exceeded its dividend guidance after posting a 7.5% increase in comparable net property income, while Hyprop Investments delivered improved results and raised its dividend payout ratio thanks to a healthier balance sheet. While 2025 has so far been more subdued than 2024, Anderson maintains that the path forward for the sector remains promising. 'The improving property fundamentals in South Africa continue to point towards a return to net property income and dividend growth for the sector over the next two to three years,' he said. 'Investors should not lose sight of that.' In his view, the South African REIT sector is not only stronger than it was five years ago - it's also better positioned to weather the uncertainty that lies ahead. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
